German Bill Revises Energy Tax Concessions For Industry

The German Cabinet has approved a bill to modify the nation's renewable energy law (EEG) to bring renewable energy tax concessions for energy-intensive companies (EEG-Umlage) into line with European Union law.

Under the changes, companies eligible for concessions will pay 15 percent of the renewable energy levy, currently set at 6.24 cent per kilowatt-hour (kWh), up to a threshold of 4 percent of gross value added, for companies whose electro-intensity is below 20 percent. Meanwhile, the tax is capped at 0.5 percent of gross value for companies whose electro-intensity is above 20 percent.

Companies must pay the charge in full for the first gigawatt-hour (GWh) and pay 0.1 cent per GWh thereafter. This is to ensure a minimum contribution from privileged companies to the country's renewable energy fund, which is used to finance the transition to renewable energy sources.

The draft legislation provides that a company's tax payments must not rise by more than double from one year to the next, up to 2019. Additionally, a hardship clause stipulates that companies newly excluded from the scope of the special equalization regulation will pay 20 percent of the tax, after the first GWh, for an unlimited period.

German Economy and Energy Minister Sigmar Gabriel said that the new regulation will preserve the competitiveness of the territory's energy-intensive industry, while complying with European Union state aid law, thereby guaranteeing certainty for investors.

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